States Take the Lead on Banning Noncompete Agreements

[Passages]

The FTC will probably stop defending its proposed worker protection on July 10. But action in both red and blue states is heating up.

by David Dayen July 2, 2025

Next week, the Federal Trade Commission faces a critical deadline over whether it will continue to defend a ban on noncompete agreements (that is, employment contracts that prohibit workers from taking job at an employer in the same industry) issued under its former chair Lina Khan. It seems unlikely that new chair Andrew Ferguson will keep the important safeguard for workers’ economic liberties alive.

A Trump-appointed judge in Texas, Ada Brown, set aside the noncompete ban last August, claiming that the FTC lacked the statutory authority to issue it, and that it was “arbitrary and capricious” under the Administrative Procedures Act. Because this was an APA set-aside and not a nationwide injunction, the recent Supreme Court ruling against nationwide injunctions does not actually apply, though many have been skeptical of Judge Brown’s authority to block noncompete agreements nationwide. (That’s especially because a separate suit in Pennsylvania upheld the ban, while another lawsuit in Florida is under appeal.)

The FTC then appealed Judge Brown’s ruling to the Fifth Circuit Court of Appeals, but since the Trump takeover, the agency has not acted since filing a motion in March putting the case in abeyance. That abeyance ends July 10, when Ferguson will have to make a decision.

Ferguson opposed the ban when it was finalized last year, saying that it was “the most extraordinary assertion of authority in the Commission’s history.” None of the Democrats who supported the bill are currently in any position to challenge Ferguson: Donald Trump illegally fired the two remaining Democrats last year, and one of them, Alvaro Bedoya, left to take a new job while he continues to challenge his firing in court.

https://prospect.org/labor/2025-07-02-ftc-noncompete-state-regulation-workers-wages/